Calm surface, shifting currents
January's kicked off with a quieter stretch, but don't let the calm skies fool you. Beneath the surface, a blend of softer employment data, stable mortgage rates, and cautious optimism from the Bank of Canada is starting to shape the landscape for the next few months.
Fixed rates aren't moving—because bond yields aren't either
Fixed mortgage rates in Canada remain mostly unchanged, and that's largely thanks to Government of Canada bond yields staying flat. The same holds true south of the border, where U.S. Treasury yields barely blinked at their December job numbers.
Here at home, December's employment report was a bit of a mixed bag. We saw the economy add about 8,200 net new jobs—technically growth, but much softer than the previous three months' trend (which ran around 60,000 to 66,000 jobs a month). This cooler pace of growth supports the Bank of Canada's position that inflation pressures—especially from wages—are manageable for now.
Interestingly, while full-time job numbers rose by 50,000, we also lost 42,000 part-time positions, many of them held by younger Canadians. That shift raises some concern for the rising generation of first-time buyers, particularly in higher-cost markets like Calgary and Edmonton, where affordability is already tight.
On the brighter side, more people entered the workforce in December, which caused a modest tick-up in unemployment to 6.8%. Wage growth also softened slightly, dropping to 3.4%, still outpacing inflation and preserving your spending power. Combine all this, and the Bank of Canada, in recent statements, seems content to wait and watch. Its policy stance is still holding—for now.
The latest on rates
Fixed rates in Canada were essentially unchanged last week. Right now, bond yields aren't pushing rates meaningfully higher or lower. That said, fixed rates still have a bit of an upward bias, especially while concerns around government spending and stubborn inflation—particularly in the U.S.—stick around.
On the variable side, nothing changed either. Lender discounts off prime remained the same.
As for the Bank of Canada, there's no expectation of a rate move in the near term. However, their recent messaging has been noticeably more dovish, which continues to support the idea that the next move we see will be a rate cut—not a hike.
Tip of the week: Pre-approval ≠ guaranteed approval
A mortgage pre-approval is not a promise to lend you money. Despite the name, many pre-approvals don't actually mean much from a true credit-approval standpoint.
That said, getting pre-approved is still usually a smart move.
A pre-approval can lock in a rate, which may come in handy later. And if the person reviewing your application knows what they're doing, they can give you a realistic estimate of how much you should be able to qualify for based on your income.
This post breaks down how pre-approvals actually work—and why there's always some level of residual risk that can't be fully eliminated, even with one in hand.
